General Mills Inc., the maker of Cheerios and Trix, posted a fourth-quarter profit that beat analysts’ estimates, as lower expenses helped offset sluggish US sales.
Profit was 66 cents a share, excluding some items, in the quarter ended 29 May, the Minneapolis-based company said in a recent statement — analysts had estimated 60 cents, on average. While sales fell 8.6 per cent to $3.93 billion, that topped the average projection of $3.86 billion.
The results signal that General Mills’ cost-cutting drive is helping it weather a downturn in its cereal business, hurt by US consumers eschewing the one-time breakfast staple. The company said that its expense-reduction efforts will generate annual savings of $600 million by fiscal 2018, up from a previous target of $500 million.
“Fiscal 2016 was an important step forward for our business,” chief executive officer Ken Powell said on a recent conference call. “We strengthened our business model and drove a significant increase in our profit margin.”
General Mills' shares rose 2 per cent to $67.10 at 10.16 a.m. in New York after the results were released. The stock already had gained 14 per cent this year.
General Mills has worked to boost cereal sales by adding gluten-free options and removing artificial colours and ingredients. Cereal sales fell 1 per cent in the fiscal year that ended last month, but started to turn positive in recent months, according to the company.
Sales of gluten-free Cheerios were up 5 per cent in the second half of the fiscal year. Seven cereals now made without artificial flavours and colours, which debuted in January, also saw improved sales. The brands, including Golden Grahams and Trix, were up 8 per cent during the same period.
“Our cereal business has consistently strengthened throughout the year,” Powell said.
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